How digital music services may be fuelling a ‘superstar artist economy’

March 4th, 2014 by Stuart Dredge

Music industry analyst Mark Mulligan’s MIDiA Consulting has published a new report exploring the ‘superstar artist economy’. It suggests that while artists’ share of total recorded-music income has grown from 14% in 2000 to 17% in 2013, the top 1% of musical works are now accounting for 77% of all those artist revenues thanks in part to a “tyranny of choice” on digital services.

“The democratisation of access to music distribution has delivered great benefits for artists but has contributed to even greater confusion for fans, ironically culminating in an intensification of the superstar effect, with the successful artists relative share of the total pot of musical works getting progressively smaller,” as he puts it.

So, while the report suggests that the growth of streaming has boosted global artist revenues since 2010, it suggests that the $400m of streaming and subscription income for artists in 2013 was more weighted to the biggest stars than ever. The report breaks down the typical catalogue of a digital music service to gauge how much of it is meaningful.

“Of a typical 25 million digital catalogue only 6 million is ‘serious’ catalogue and of that only 1.25 million is streamed or purchased with any meaningful degree of frequency. The vast majority of the rest is only ever going to perform miserably in revenue terms,” it claims.

“In the context of 25 million digital tracks 250,000 tracks – i.e. 1% – may not be quite as staggeringly small a number as it might at first appear but it nonetheless remains a clear imbalance and one that is intensifying.”

The report takes pains to point out that “superstar” artists aren’t necessarily just those signed to major labels, noting that a number of independent artists have broken into the 1% tier. It’s also clear that this isn’t just a digital phenomenon – witness the 75% share that the top 1% of artists take in physical sales. But the report is likely to fuel more arguments about whether streaming pays off for smaller artists.

“Superstar streaming and subscription artist revenue totaled $300 million in 2013, compared to $90 million for the remainder,” it suggests. “Crucially the $300 million is a larger amount of income shared among a smaller number of artists making the effect doubly impactful.”

6 responses to “How digital music services may be fuelling a ‘superstar artist economy’”...

But I’m still mystified by your argument on ‘does streaming work for smaller artists’? Surely, if the definition of a ‘smaller artist’ is “an artist that doesn’t sell much”, please tell me which model has ever worked for them or why streaming should provide them with more income than they received before?

I can summarise it so we can all move on:
Q. Does streaming work for smaller artists?
A. No, because by definition, that’s what it means to be a ‘smaller artist’.
Q. So, what can they do?
A. Work on ways to become a ‘bigger artist’, just like it’s always been

I like the statement “get 1000 people to give you 100 dollars every year and you’ve got a full time job”

1000 people (especially online) isn’t a lot of people. Smaller artists should be able to make a living from their core following, but fact is few tools focus on the things it takes to accomplish this. I won’t get into what every existing service lacks. Every service has only hinted at the potential that has yet to come. The fact is, each music service is built by people who are trying to solve a problem that they don’t actually have, and you can tell by the result of their half baked UI’s and functionality.

Comparing 2000 to 2014, there’s not much difference in the percentage going to the top 1%. And physical sales seem just as vulnerable to the same effect. So perhaps it’s the case that the promised “Long Tail” isn’t affecting the musical superstars. (Does that mean that it’s taking share from the “Musical Middle Class” instead?)

Furthermore, how many “smaller artists” are there? In the past, distribution was limited to the 5,000 titles that Walmart could carry. Today there must be 100,000 titles representing the long tail. But for almost all of those artists, a few thousand dollars would be a tremendous windfall because it would cover the cost of making the record. Under the old distribution model, artists at that level would get nothing.